NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded four and affirmed nine classes of COMM Mortgage Trust 2004-LNB2, commercial mortgage pass-through certificates. A detailed list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
The upgrades and affirmations reflect increasing credit enhancement as a result of significant paydown since the last rating action and stable projected performance. Fitch modeled losses of 2.1% of the remaining pool; expected losses on the original pool balance total 2.7%, including $23.9 million (2.5% of the original pool balance) in realized losses to date. Fitch has designated three loans (10.1% of the pool) as Fitch Loans of Concern, which includes two specially serviced assets (5.3% of the pool).
As of the February 2013 distribution date, the pool's aggregate principal balance has been reduced by 90.1% to $95.5 million from $963.8 million at issuance. Per the servicer reporting, two loans (68.9% of the pool) are defeased. Interest shortfalls are currently affecting classes J through P.
The largest contributor to expected losses is a specially-serviced loan (3.3% of the pool), which is secured by a 59,933 square foot (sf) retail center located in Fort Worth, TX. The center is occupied by a mix of predominantly small local tenants with select national tenants. The loan recently transferred to special servicing in January 2014 due to maturity default. Occupancy and DSCR was 100% and 1.23x as of year-end (YE) 2012, respectively. The special servicer is discussing workout options with the borrower at this time.
The next largest contributor to expected losses is a specially-serviced loan (2% of the pool), which is secured by an 80-pad mobile home park located in Dundee, MI approximately 50 miles southwest of Detroit and 30 miles north of Toledo, OH. The loan transferred to special servicing in October 2013 for imminent default as the Borrower communicated inability to pay the loan off at maturity. The loan matured in December 2013 and is now in maturity default. Local counsel has been retained. Occupancy and DSCR was 100% and 1.16x as of YE 2012, respectively. The Lender currently plans to continue discussions regarding workout options.
Upgrades to classes D, F, H, and J are supported by increased credit enhancement due to paydown from 10-year maturities and the percentage of defeased loans in the remaining pool (68.9%). However, the upgrades are constrained by pool concentration, limited near-term paydown, and potential for future downgrade should losses increase on the specially serviced loans. The distressed classes (those rated below 'B') are expected to be subject to downgrades should realized losses be greater than Fitch's expectations.
Fitch upgrades the following classes as indicated:
--$19.3 million class D to 'AAAsf' from 'AAsf', Outlook Stable;
--$9.6 million class F to 'Asf' from 'BBBsf', Outlook to Stable from Negative;
--$10.8 million class H to 'Bsf' from 'CCCsf', assign Outlook Stable;
--$4.8 million class J to 'CCCsf' from 'CCsf', RE 100%.
Fitch affirms the following classes as indicated:
--$14.7 million class B at 'AAAsf', Outlook Stable;
--$9.6 million class C at 'AAAsf', Outlook Stable;
--$8.4 million class E at 'AAsf', Outlook to Stable from Negative;
--$10.8 million class G at 'BBsf', Outlook to Stable from Negative;
--$6 million class K at 'Csf', RE 100%;
--$1.4 million class L at 'Dsf', RE 30%;
--$0 class M at 'Dsf', RE 0%;
--$0 class N at 'Dsf', RE 0%;
--$0 class O at 'Dsf', RE 0%.
The class A-1, A-2, A-3 and A-4 certificates have paid in full. Fitch does not rate the class P certificates. Fitch previously withdrew the ratings on the interest-only class X-1 and X-2 certificates.
Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 11, 2013 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:
Structured Finance >> CMBS >> Criteria Reports
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--e Rating Criteria' (May 24, 2013);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).
Applicable Criteria and Related Research:
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
Global Structured Finance Rating Criteria